wholesale pricing changes - bcldb corporate · 2015. 3. 2. · •subject to annual cpi adjustments...

Manufacturers, Agents and Suppliers

Information Session

February 11, 2015

Wholesale Pricing

Changes

Discussion points

• Introductions

• Objectives for today

• Background

• Wholesale pricing: overview of the government’s announcements

• Key upcoming changes: what and when?

• Next steps

• Questions

2

Discussion points

• Introductions


• Background



• Next steps

• Questions

3

Introductions

Roger Bissoondatt Chief Financial Officer

Bill Michael Director, Purchasing

Audrey Wong Acting Director, Policy and Communications

Jaime May Finance Director, Special Projects

Yolanda Lam Wholesale Pricing Calculator Specialist

Disclaimer:

This information is based on current processes and decisions. In the event of any changes,

this information will be subject to amendment.

4

Discussion points

• Introductions


• Background



• Next steps

• Questions

5

Objectives for today

To provide an overview of:

• Wholesale pricing-related changes that are being implemented associated with the government’s announcements;

• Upcoming changes that impact industry partners;

• Walk-through of the Wholesale Pricing Calculator; and

• Key timelines and next steps.

6

Discussion points

• Introductions


• Background



• Next steps

• Questions

7

Background

• 2013 B.C. Liquor Policy Review

• New Wholesale pricing model

• Even footing for industry and increase transparency

• Implementation – April 1, 2015

8

Discussion points

• Introductions


• Background

• Wholesale pricing: overview of the governments announcements


• Next steps

• Questions

9

Wholesale pricing: overview of the governments announcements In association with licensing and other changes, steps aimed at modernizing BC’s liquor industry include:

To be implemented by April 1 2015

Common wholesale

price for all retailers Gradual mark-up system

for breweries

Increasing convenience

to consumers

Ability for some of these to

include:

• Eligible grocery stores to sell

alcohol

• Ability for BCLS to expand

operating hours

• Ability for BCLS to offer

refrigeration.

10

Discussion points

• Introductions


• Background

• Wholesale pricing: overview of the governments announcements


• Next steps

• Questions

11

Key upcoming changes: what and when?

• Implementing these changes necessitates an update to many of BCLDB’s business processes and systems that will also streamline the way BCLDB does business with industry partners.

12


13


Implementation of new pricing model • Wholesale pricing

• Changes from Discount-off Display Price to a Duty Paid Cost plus markup

• Common wholesale price for all retailers

• Tax excluded pricing

• Commissions on retail sales replaced with supplier’s own profit margin

• Graduated mark-up rate for medium sized breweries

• Licensed Hospitality will continue to purchase at the LDB established retail price

• Existing programs for BC Manufacturers will continue

• Wholesale pricing calculators have recently been sent to Manufacturers, Agents and

Suppliers

When: April 1, 2015, with wholesale pricing

released February 1, 2015.

More information • New mark-up schedule – effective April 1 2015 - click here

14

http://www.bcldb.com/doing-business-ldb

Implementation of new pricing model

LDB Display Price

Less PST and GST

= Retail Price

Less applicable wholesale discount

= Wholesale Price for that Customer Type, plus GST

As Is

Wh

ole

sale

Cu

sto

mer

Ho

spit

ality

Cu

sto

me

r LDB Display Price

Less PST

= Price for Licensed Hospitality

Pri

cin

g

Pro

ce

ss Retail Limited Time Offer Program

Price Changes – change requests are made and lead to a tax-in display price

Wholesale Price (tax excluded), plus GST

New Model

Wholesale Price

Plus Retail markup

= LDB established retail price (tax excluded), plus GST

Wholesale Price Promotion Program

Price changes – request changes are made and lead to the tax-excluded wholesale price

15

Implementation of new pricing model: Wholesale Pricing

• The current discount pricing system for wholesale purchases will be eliminated and

a duty paid cost plus category mark-up pricing will come into place

Display Price – As Is Wholesale Price – To Be

Prime Cost

+

Domestic Charges (if applicable)

Prime Cost

+

Domestic Charges (if applicable)

= In Bond Cost = In Bond Cost

+ Excise & Customs (if applicable) + Excise & Customs (if applicable)

= Duty Paid Cost = Duty Paid Cost

+ Volume Markup/Distribution Charge

+ % Markup for Wine, Spirits, Refreshment

Beverages

OR

+ Volume mark-up for Beer

+ Cost of Service Fee

+ Distribution Charge (beer only)

+ % Markup for Wine, Spirits, Refreshment Beverages

OR

+ Per Litre Markup by Supplier annual production for Beer

+ CRF + CRF

= LDB Retail Price = LDB Wholesale Price

+ GST

+ PST

+ GST

= LDB Display Price before applicable container

deposit

= Final LDB Wholesale Price before applicable container

deposit

16

Implementation of new pricing model:

Wholesale Pricing Mark-up Schedule, effective April 1, 2015. • The new wholesale pricing schedule simplifies the current, complex model

• All products will fall under the Product Types: Spirits, Refreshments, Wines and

Beer

Spirits/Liqueurs

Fortified Wine/

Table Wine

Draught Beer/

Packaged Beer

Pre-Mixed Cocktails/

Cider/Coolers

Previous product types

are now merged to four.

17

Implementation of new pricing model: new beer mark-up schedule

A new beer mark-up structure is also being implemented on April 1, 2015.

There are a number of changes being introduced:

• The new mark-up structure for beer introduces a graduated increase in mark-up as a brewery’s production increases

• Removal of ‘fiscal cliffs’ between mark-up tiers

• Production level increased for medium size brewery (up to 350,000 HL)

• Draught and packaged beer are subject to the same mark-up rate

• Subject to annual CPI adjustments

• The new tiers and associated mark-up are as follows:

Annual Production in HL Mark-up per Litre

0 – 15,000 $0.55

15,001 – 350,000 $0.56 – $1.02

> 350,000 $1.08

Click here

18

http://www.bcldb.com/files/Copy of Beer Mark up spreadsheet 2015_0.pdf

Direct Delivery for Wholesale Customers and Hospitality

Direct Delivery by Private Distributors

• Manufacturers that currently direct deliver to wholesale customers will continue being able to do so

• Each SKU will have a common wholesale price for all Retailers.

Hospitality customers

• Hospitality customers will continue to purchase product from BC Liquor Stores, agents of the LDB (Direct Distributors) and the Wholesale Customer Centre (where applicable) at the LDB established retail price, plus GST.

19

Implementation of new pricing model: wholesale pricing calculator

• New wholesale pricing calculator was made available February 1, 2015 to reflect new pricing model effective April 1, 2015.

• Existing pricing simulator will remain on the website until April 1, 2015 to reflect current pricing model up to, and including, March 31, 2015.

Each product type has its own calculator (beer, wine, spirits,

refreshment beverages).

These will be hosted on the Vendor Website from February 1, 2015.

20

The wholesale pricing calculator

Objectives of the calculator

• To calculate the wholesale price

• To calculate case cost with preferred wholesale price

• To understand the rates within the calculation.

How do I use it?

• Choose the correct Wholesale Calculator

• Save the Wholesale Calculator on your desktop before opening

• Enter in product attributes and cost per case

• Click calculate

Please note: a walk-through of the calculator will be provided at the end of this presentation.

21

The wholesale pricing calculator

Required information

• Type of Product – to determine which calculator to use

• Product attributes (ie sub-category, case size)

• Case Cost or Wholesale Price per selling unit

Points to note

• Must save prior to opening for calculation

• Not compatible with MAC

• Used for a price estimation only

Please note: a walk-through of the calculator will be provided at the end of this presentation.

22


Revised wholesale reporting • New Wholesale and Retail tax excluded pricing

• New Customer Types

• LDB will no longer collect and remit PST and GST on your behalf for retail sales.

You must register for PST if you have not already done so.

• Wholesale Reporting by Manufacturer for sales to its own stores

• Updated Sales Reporting formats • Direct Sales Website Reporting

• CSV File Upload

• Manual form changes

When: Effective April 1, 2015

More information • Direct Sales Web Reporting CSV Upload specification – click here

• Direct Sales Web Reporting CSV Fields Specification and Validation Rules – click here

• Direct Sales Web Reporting CSV Sample file – click here

• Sales Reporting Manual Form specification - click here

23

http://www.bcldb.com/doing-business-ldbhttp://www.bcldb.com/doing-business-ldbhttp://www.bcldb.com/doing-business-ldbhttp://www.bcldb.com/doing-business-ldbhttp://www.bcldb.com/direct-sales-web-reporting-user-guides

Identified Reporting and System Impacts

• Manufacturer Stores

• Manufacturer stores will no longer be reporting on retail sales

• Reporting will now be on Manufacturer wholesale sale to the On-site/Off-site

Manufacturer store

• On-site store retail sales will be reported as sales to the Manufacturer Store number used

as the customer number

• Sales to wine manufacturer onsite lounges (manufacturers endorsement type) will be

reported at Hospitality prices using the LCLB-issued endorsement license number as the

customer number

• Customer Type Changes • Retail sales (e.g. Bulk and Special Occasion Licenses) will no longer be reported

to LDB as Counter/retail

• New customer types – Grocery, VQA and Manufacturer Onsite Stores

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Summary of Systems Changes

Price Distribution

• LDB to provide Private Distributors with the following prices for their SKUs:

• Wholesale Price for sales to

wholesale customers

• Retail Price for sales to hospitality

customers

• Price list will be available for download in CSV format via the Vendor Facing Website

Direct Sales Website Reporting

• All transactions must reference valid customer types (Counter retail sales no longer reported)

• “Display Price” header changes to “Price”

• Discount field will be removed throughout the application

• Revised PDF output formats for Sales and Returns

• PDFs generated prior to system change date will

continue to reflect old format (discounted pricing)

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Updated Sales Reporting formats: CSV Upload File Format

• Rename “Display_Price” field to “Price” in upload template

• New validation rules to be added on LDB side to verify revised list of valid customer types

Store_Number Transaction_Type Transaction_Date Invoice_Reference_Number Original_Invoice_Number Customer_Number Customer_Type Payment_Method SKU Quantity Price Container_Deposit Total_Doc_Amount Return_Reason_Code

9999 SALE 1/7/2014 200001 COU 805648 3 9.98 0.3 70.64

9999 SALE 1/7/2014 200001 COU 118034 5 7.98 0.5 70.64

9999 RETURN 1/5/2014 200002 COU 805648 1 9.98 0.1 26.25 1

9999 RETURN 1/5/2014 200002 COU 118034 2 7.98 0.2 26.25 1

9999 RETURN 8/20/2013 200003 84561 COU 805648 1 10.59 0.1 27.83 1

9999 RETURN 8/20/2013 200003 84561 COU 118034 2 8.47 0.2 27.83 1

9999 SALE 1/7/2014 200004 44300 LIC 177865 10 8.69 2 89.64

9999 SALE 1/7/2014 200004 44300 LIC 195651 1 8.98 0.1 89.64

9999 RETURN 1/8/2014 200005 100004 44300 LIC 177865 1 8.69 0.2 8.14 5

9999 SALE 1/7/2014 200006 649 RAS 195651 20 8.98 2 146.3

9999 RETURN 1/8/2014 200007 100006 649 RAS 195651 10 8.98 1 73.16 7

9999 SALE 1/8/2014 200010 191537 LRS PAP 805648 4 9.98 0.4 80.78

9999 SALE 1/8/2014 200010 191537 LRS PAP 118034 8 7.98 0.8 80.78

9999 RETURN 8/20/2013 200011 84560 191537 LRS HOC 805648 2 10.59 0.2 42.83 1

9999 RETURN 8/20/2013 200011 84560 191537 LRS HOC 118034 4 8.47 0.4 42.83 1

9999 SALE 1/8/2014 200016 BLK 177865 25 8.69 5 225.25

9999 RETURN 1/8/2014 200017 BLK 195651 10 8.98 1 90.8 1

“Display_Price” field

renamed “Price”

Customer Type value

“COU” no longer valid.

Direct Sales Web Reporting CSV Upload specification Direct Sales Web Reporting CSV Fields

Specification and Validation Rules

26

http://www.bcldb.com/direct-sales-web-reporting-user-guides

Updated Sales Reporting formats: Manual & System Generated Forms

• LDB will continue to provide PDs with the ability to report sales via manual forms

• PDs submitting forms printed directly by their systems will need to update the output format to resemble LDB’s new document formats

• Form Changes Summary

• Customer Types

• Add: Grocery, Manufacturer Onsite Store, VQA stores

• Remove: Counter, Bulk, SOL

• Price field to be populated with Wholesale Price for wholesale

customers or Regular Retail Price for hospitality customers

• Taxes (GST) must be provided on Product Sub-Total

• Forms that have changes include:

• Licensee Agency Order form

• Customer Return form

• Daily Batch Control Document

Click here for Sales Reporting Manual

Form specification

27

http://www.bcldb.com/files/Solution Design Document_Sales Reporting Manual Form Specifications v1 0 _0.pdf

Reporting and System Impacts

RECAP:

• New Customer Types

• Tax excluded wholesale and hospitality reporting. No retail reporting going forward.

• LDB will no longer collect and remit PST and GST on your behalf for retail sales. You must register for PST if your have not already done so.

• Wholesale Reporting by Manufacturer for sales to its own stores

• Updated Sales Reporting formats

• Direct Sales Website Reporting

• CSV File Upload

• Manual form changes

NEXT STEPS:

• Revised specifications now published - here • Direct Sales Web Reporting CSV Upload specification

• Direct Sales Web Reporting CSV Fields Specification

and Validation Rules

• Direct Sales Web Reporting CSV Sample file

• Sales Reporting Manual Form specification

• Testing of CSV files for Private Distributor reporting - March 2015

• Reporting cut-over plan to be communicated in due course.

28

http://www.bcldb.com/doing-business-ldbhttp://www.bcldb.com/direct-sales-web-reporting-user-guideshttp://www.bcldb.com/direct-sales-web-reporting-user-guides


Updated and revised agreements • Being amended to reflect:

• The new wholesale pricing requirements; and

• The new and updated business processes.

When: Effective April 1, 2015, with agreements anticipated to be issued by

early March 2015.

29


Revised product registration and listing website (vendor

websites) Two vendor website releases are planned in order to support industry partners

in the transition to the new pricing model.

• New product categories and attributes to better categorize and market

your product within the BCLDB system

• Minimal process changes

• Same log-in

• eREG (LDB) and eLAF (BCLS) approach remains the same

• No specific training required.

• Website amended to reflect the new wholesale pricing model

• Approval letter to reflect wholesale price for vendor-specific SKUs

When: February 1, 2015 – release 1.

March 1, 2015 – release 2.

More information

• See following slides regarding

• Changes to the vendor website

• New and updated attributes

Release 1

(Feb 1)

Release 2

(Mar 1)

30

Revised product registration and listing website There are some changes to the Vendor website to reflect the transition to the new model, including:

New and updated registration fields (eREG)

- Updated listing fields (eLAF)

This fields have intuitive drop-down options to make the registration and listing process more streamlined.

31


Roll-out process of Period 1 2015 (April 1st 2015) pricing

cycle

• Feb 1 – LDB wholesale pricing available to suppliers through the wholesale

price calculator and vendor-specific price list

• Feb 13 – deadline for submitting:

• wholesale price changes,

• wholesale pricing promotion programs (LTOs); and

• annual beer production volume (for new beer mark-up model)

• Mar 6– LDB publishes Period 1 (April 1, 2015) wholesale prices

• Mar 20 – BC Liquor Stores publishes Period 1 (April 1, 2015) retail prices for

vendor-specific SKUs (hospitality sales)

• Apr 1 – effective date for wholesale and retail prices.

When: From February 1, 2015

More information

• Period 1: Pricing cut-off dates – click here

• Quarter 1 2015/16 (Period 1-3) key pricing cycle dates are published here

32

http://www.bcldb.com/files/Cut over for Period 1 2015 Pricing_0.pdfhttp://www.bcldb.com/doing-business-ldb

Roll-out process of Period 1 2015

33

Please note: Quarter 1 2015/16 (Period 1-3)

key pricing cycle dates are published here

Manufacturers, agents and suppliers are currently providing their supplier price, which will determine

the new wholesale prices (by SKU). Period 1 wholesale prices will be published March 6, 2015.


Discussion points

• Introductions


• Background



• Next steps

• Questions

34

Milestones and next steps

Feb 1, 2015

• Wholesale pricing calculator made available.

March 6, 2015

• LDB publishes wholesale prices

March 20, 2015

• LDB publishes LDB established retail prices for hospitality

April 1, 2015

• Effective date for wholesale and retail prices

Regular

• Information updates

35

Discussion points

• Introductions


• Background



• Next steps

• Questions

36

Questions or queries, please direct them to:


[email protected]

Disclaimer:

This information is based on current processes and decisions. In the event of any changes,

this information will be subject to amendment.

37
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wholesale pricing changes - bcldb corporate · 2015. 3. 2. · •subject to annual cpi adjustments...

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